By understanding a few key metrics, you’ll be able to find waste in your restaurant, and use that knowledge to reduce costs and increase profit. This guide will make it easy, we promise.

This guide will focus on a few key performance indicators that relate to overall restaurant profitability. The formulas in this guide will help you determine if your restaurant operation turned a profit for the day.

Let’s take an example. You have $3,000 in inventory at the beginning of the week, and you spend an additional $1,500 during the week. Your restaurant was busy making food, and at the end of the week your inventory is now valued at $2,500.

So, to figure out your COGS for the week:

Track COGS each week to determine your monthly COGS. Divide monthly COGS by the number of days in the month to find your daily COGS average.

Your daily cost of goods sold average will help you determine your daily variable costs. Because your food costs are determined by the number of guests you serve this number will change month to month, based on seasonality and other factors.

Labor is one of the highest cost contributors in a restaurant, so it’s important to track labor closely to protect profitability.

To determine your monthly average labor cost calculate the following for each of your employees. Be sure to include additional costs associated with their employment such as insurance and employment taxes.

For example, Joseph makes $10 an hour, and worked 60 hours this month. State fees and insurance for Joseph total $200.

Add the labor cost of each employee to find your total labor cost for the period. Divide the total monthly labor cost for all employees by the number of days in the month to find your average daily labor cost.

Now that you have a basic understanding of restaurant key performance indicators you can gain additional insight by tracking performance more closely. You can start to dig deeper and track ROI for each meal service. Or really go in depth and track every hour, every menu item and every employee.

To gain this level of insight you need a POS with robust reporting tools. Rezku POS has hundreds of reports to help restaurant owners track KPIs and gain greater business intelligence.

With Rezku POS Back Office you can access your restaurant’s data anywhere you have internet access. You can run every report, check sales, view your labor to sales ratio and much more.

For a free restaurant management technology consultation contact Rezku today. See for yourself how Rezku is helping restaurant owners across America do more.

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